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Why you need to measure the relative performance of your company

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Want to improve your firm’s position in the market? Start with your relative performance, write Michael Raynor and Derek Pankratz for Harvard Business Review.

Knowing where your company has been and where it is going is essential for setting the right priorities for the future. Should you be cutting costs or expanding? Pricing up or pricing down? Without understanding the relative dimension of your company’s performance, you could be missing low hanging fruit or chasing an unwinnable goal.

“Relative performance, expressed in percentile rankings, tells you where you have the most room for improvement and sets an upper bound on what is reasonable for you, given how well you’re already performing in comparison with other companies.”

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